Banking on collaboration

Written by: Mike Laven

Published on: July 23, 2013

Banking needs shaking up. Over the last few years, an increasing number of challenger and specialist banks have entered the market to try to innovate the banking scene. At the same time, we have seen many of them struggle with the burden of gathering the financial and technical resources to build a viable and scalable proposition for their customers entirely on their own. Instead, to expand their business and avoid hefty infrastructure costs, many progressive banks have been collaborating with third parties to bring different services to market quickly and at low cost. A classic example of this is international payments where companies such as Currency Cloud have provided a number of banks with the tools to make cross-border payments a pain free reality.

For instance, you might be a bank that is limited to handling domestic payments but want to give your customers a multi-currency offering without having to build an infrastructure from scratch. As a case in point, <a href=https://www.fidorbank.uk>Fidor Bank</a>, an internet-only challenger bank based in Germany, found the prospect of upgrading its current system time-consuming and expensive, especially if integrated with a traditional bank’s API, based on the cumbersome FIX protocol. As an alternative, Fidor Bank chose to build out their offering through the capabilities of Currency Cloud and as a result was the first bank in the world to have a <a href=https://www.currencycloud.com/case-study/fidor-bank/>multi-currency banking-regulated eWallet</a>. This allowed its clients to buy currency, make payments and view balances in a number of different currencies from GBP to USD, CHF, PLN and many more. This facility was made possible by integrating Currency Cloud’s API into Fidor Bank’s systems, a quick and easy process that allowed Fidor Bank to rapidly expand their business to include foreign exchange, significantly improving its services.

Alternatively, you might be a specialist bank which needs to expand to a payments infrastructure that can handle online payments in multiple currencies. Currency Cloud recently began work with a bank that specializes in enabling web merchants to receive payments online. However, when their customers wanted to make large payments to their suppliers abroad, they had to do so through a third-party bank. The bank was losing business to competitors, customers had to interrupt their workflow by making cross-border payments through another bank and costs increased. As a solution, Currency Cloud provided the bank with a complete and bespoke infrastructure to enable web merchants to make multi-currency or SWIFT payments of any size to their suppliers. This low cost solution means the bank and its customers now have a seamless workplace without the hassle of having to go to a third party!

On the other hand, you might be a bank that can already make international payments but you want to improve that capability. Expanding a business often means taking on more staff or revamping existing technology, both of which are expensive. To solve this, Currency Cloud can improve and streamline internal processing to reduce operational risk and overheads so that a bank can service more customers with fewer personnel. By using our platform, businesses are able to augment their existing international payments infrastructure, a solution that we’ve provided to a European bank that focuses on serving high net worth individuals and businesses. While they already had an infrastructure in place, we have provided them with an even more sophisticated technology platform that focused on those increasingly important internal improvements.

At Currency Cloud, we often talk about how a new wave of internet-enabled “FinTech” firms are collaborating with each other to provide better financial services to their customers (see Tearing Up the Financial Services Value Chain). These firms are more agile than traditional banks that are renowned for being slow to adopt new technologies. Therefore, what we are also seeing is the onset of new banking models, of which are underpinned by the technology of third party FinTech firms. The vertically integrated model of banking is dead. By bringing in the capabilities of specialists, progressive banks are finding that they don’t have to go it alone and that they can quickly optimize services for their customers easily and at a low cost.